In this week’s Energy Market Update from Direct Energy, Tim Bigler discusses a new PJM proposal and how it could impact energy prices in affected markets.

What is The Change?

Basically, the PJM regional transmission organization wants to change how they set megawatt prices. According to Direct Energy, right now “the last unit in determines energy costs for the area”, but they want to change the locational marginal price to $20.

What Does This Mean?

Tim does a great job of explaining the details of the plan, so check out the video for more details. An important takeaway is that their predictive model anticipates a potential net increase in costs of 2 – 5 percent.

Is This a Sure Deal?

Not at all. It’s just a proposal for now, so there’s no need for alarm. Many things need to happen for this change to occur. That said, it should remain on your radar if you sell energy in the PJM market.